Cryptosociety 2.0

I think we all started the decentralized/blockchain project thinking we could change the world. We intended that it would be free, egalitarian and full of leisure. No more centralized governments or corporate overlords, we would all have a say and all the access to resources and of course, all the money.

It has been over 13 years since Bitcoin and about 7 since Ethereum (that’s not long really) started and we have become the new CDOs (Derivatives) for Wallstreet to gamble on.

We have lost our way

In 2017, all that time ago, the original guides to Solidity on Ethereum’s site were for Basic Income, Crowdsourcing (that became ICOs), and DAOs - direct democracy. ICOs took off but where are the UBI and global democracy since then?

Just like .com the ICO become the dominant use for crypto because it resembled the previous order. The order we were trying to disrup... Revolutionize. We still have the tools so we can still make the new world we imagined.

Here’s a plan

We create an Integrated decentralized Guaranteed Income (GI) of 30k (K30,000), with a fully-scaled “ice” (solid liquidity) stable coin, face recognition based verification of unique identity  + Arbitration based objection to weed out fake accounts. Demurrage and flow siphon (transaction tax) to control inflation/deflation. Automated self-lending (DeFi) service, coin/token/fiat exchange, And social money for civic organizations (true global democracy).

Decentralized

Any decentralized engine can be used provided it does not use Proof-of-Work (PoW) because that is a waste of energy and it kills the environment, or Proof-of-Stake as it leverages wealth onto power and responsibility and relies too much on game theory to be trusted.

It would be preferable to create a decentralized system from scratch or use a Virtual Machine for an existing system. It is important that the system protocols are set in place at the start, you know it and can rely upon it. No politician or corporate raider can change the rules or grab your data for their own purposes. The code for all that on top of the Decentralised engine will be open source so if you find this system wanting you can copy and paste the code and then tweak it for a new system.

Universal Income

This will be tiered based on the period (time) of no objection to unique personhood.

First-year is 3,000 (Newbie), the second 10,000, third is the full payment of  30,000 per person per year paid daily (Citizen).

Once you get through the first 3 years you will be a citizen. It would be nice to give all access to everyone at the start but that is not our world, a world of Twitter bots and fake news, and Facebook, and Chinese internet armies.

Stale Account

Citizens must:

All citizens will need to select what will happen to their money/debts/assets at death and or the cessation of their account, and how this will be determined (cessation may be determined by failing identification test/s). This is essentially writing a will when you become a citizen.

Another citizen will need to be selected to receive the account balance, debts, assets, etc. The Citizen will need to accept the responsibility of a ceased account. If you cannot find someone to accept your ceased account, your borrowing from the Credit system (see below) will be limited to tier 2 and any debt annulled on cessation; and post-cessation the ability to open a new account other than newbie will be voided.

A citizen must appoint a citizen or a decentralized Oracle that is not in the “will” to determine death or permanent abandonment. If the Oracle disappears before the user does it will be referred to arbitration.

Simply, citizens must choose an Oracle/Citizen to determine their circumstances. And, other citizens to receive their money, debts, and assets. Akin to appointing an executor, and beneficiaries.

Stable Coin

An automatically adjusted coin based upon an index of fiat currencies compared to gold.

A quorum  (the greater of 3 or 10% of active Oracles – an Oracle may switch on or off activity) will need to enter the exchange rate values they see daily using whatever external means they see fit and the median value will be taken for the daily adjustment. If a quorum cannot be reached the value remains as it was. This adjustment will occur when a new day begins at the international dateline.

At some point in the future, the coin will be traded for gold as much as the fiat currencies in the index. 12 months after this point the scaling can be abandoned.

Simple Scaling  - Ice (stable liquidity)

The Base coin is fully scaled in comparison to a weighted index of fiat currencies (USD, GBP, Euro, Yen, AUD) in reference to  Gold.

Coin  = to Base Coin x scale_factor (ratio)

Transaction: If you receive a payment today a Base would be derived by dividing the Coin by the scale factor at the time of the transaction. This new Base is added to previous Base amounts and your balance is the Base x the new scale_factor.

The scale_factor is published daily and accounts are adjusted accordingly.

Scale_factor = (1/price of the base coin in relation to an index)

Index = Weighted USD, EU, GBP, Yen, AUD against gold

Essentially if the price is low you get more money, if the price is high you get less.

The assumption is people will trade at  1 to 1 for ease of use as it doesn’t matter what price you buy and sell as the purchasing power remains the same.

Example: 

Say the coin is worth 0.5 Fiat

Your account has 2 base Coin, therefore, your account balance is 2 x (1/0.5) = 4

So you can buy exactly two fiat currencies. Someone holding a fiat currency (there will be arbitrage between the fiats) can buy 2 Coins for 1.

1 Coin worth 2 Fiat

Your account has 50 base Coin, therefore, your account balance is 50 x (1/2) = 25

So you can buy exactly 50 fiat currencies. Someone holding a fiat can buy 2 Kratia for their 1

This is a novel and incredibly simple way of doing stable cryptocurrency which never changes supply but equalizes purchasing power. If the currency is close to worthless (say 0.01) you have a  lot more, if it’s worth a lot (say 10,000) you have less. There is no point in buying or selling the currency at any price point other than 1 to 1.

*The Brazilians did something similar with a virtual currency to control inflation in the 1990s. It became their current currency. Essentially they had a currency pegged to USD virtual currency so that all wages and prices were quoted. The Govt released the ratio. People quickly stopped upping prices in advance.

Inflation Control

We are creating much money from nothing so to control the money supply the base is adjusted with demurrage (2.5%), and a small  (1.5%) transaction tax to control velocity.

This will stabilize the amount of money in the system. If Coins sit idle in your account they will decrease on a daily basis by the equivalent of 2.5%pa. Every time you transfer a Coin 1.5% will be destroyed.

In a perfect system, the demurrage will occur by the second, or millisecond but we will do it as close to this as possible. The flow siphon or transaction tax will make 1.5% of all transactions disappear. So if your seller expects 100 Coins, you should transfer 101.50. If you advertise a sale for 99.00 expect to receive 97.515.

This will discourage idle money and non-productive and lengthy supply chains (ie: producer – aggregator –  exporter – importer – wholesaler – distributor – major retailer – micro retailer – consumer), while controlling inflation.

The transaction tax will not control High-Frequency Trading (HFT) as most of this is done in separate centralized markets. And as such will not have the transaction tax applied per transaction but only on deposit and withdrawal.

This is actually a good thing as currently there isn’t a decentralized ledger system that could handle the number of transactions done via HFT.

Verification of a Unique Person

To open an account you will just need a simple face recognition test.

Anyone can object to another's volition, but only 1 fails per 6 months. If you object, it goes to arbitration and if your objection fails you cannot object again for 6 months. Otherwise, there is no limit to the limits of reason.

The arbitration objection

Anyone can object to someone's unique personhood, this is then sent to arbitration where randomly (this is different from Kleros where they use staking) selected arbiters decide if the “person” is unique.

Any citizen can be nominated as an arbiter and get a small fee.

Kleros is currently using something similar and I think there are flaws with the staking. The idea that we trust people to do the right thing first and weed out bad actors afterward has promise on so many levels. Most of all it smooths access.

SocialCoin:  extra money for social services

You will also get free social Coin that can be redirected to organizations that you support. 

You will receive 10,000 SocialCoins per year paid weekly.

There must be indisputable and embeddable (placed into an algorithm on the ledger) criteria for an organization to receive this extra social money.

The account/wallet must not belong to an individual. It must be a collection of unique identities creating a new wallet for which they are responsible. There must be at least 3 wallets attached to the new wallet, and the registry of members must be transparent. 

It must have a democratic (DAO or liquid democracy) system of governance. One that is embedded in the decentralized system, where all contributors can vote. This must be completely transparent and viewable by all.

The wallet (It) cannot send funds to its members.

The purpose of the social Coin is to provide Civic Organizations with money and replace current governmental civics.

Liquid (Direct) Democracy

Liquid democracy should be used to write laws, but not procedures of trade, quality control, and conflict resolution, rather for the rare changes to the Civic Associations management and overriding principles, practices, and policies. Implementation of decisions made should be entrusted to those creators, builders, maintainers, and organizers elected and hired to do so.

Also, your allocation of Social Coins is your greatest vote. If the Civic Association is not doing what you want, use your monetary votes (Monetary Democracy) to support another.

How it works

Choice 1: Monetary Democracy – moving your Social Coin to those Civic Organisations supporting you.

Choice 2: A proxy, direct voting, and proposal system.

Proxy

The purpose of proxying is to speed up the voting process by concentrating power, but also to ensure everyone has had some say in each vote while freeing many people from the effort of analyzing many proposals.

If a person does not want to vote on a proposal they must proxy their vote to someone else. Only one vote is proxied (the cost of 1 token). The proxy is secret so the receiver of the vote is not aware whether they are voting for themselves or another and therefore must act on their own conscience.

If the proxy also decides to proxy their vote the one (or many) that they have received will also be proxied forward.

If a person proxies to someone who has already proxied their vote to them creating a loop an error will appear and they will need to choose another proxy or vote themselves. The proxy availability will end before each vote allowing people to change their proxy if loops occur. The loops may be long.

The system is run through a smart contract which will allow the proxy to be canceled at any time, to run unmonitored for any period of time, and allow different proxies for different topics.

Proposals

Each proposal is broadcast for debate and improvement. Only the proposer can amend the proposal. Once it has been accepted by at least 2 sponsors who must forfeit their own vote (with any proxied votes) and  100 Coins – to prevent many unvetted proposals from being put to the vote. It must then be packaged with an Implementation and Compliance protocol which will be broadcast before voting starts.

Implementation and Compliance

Decisions are useless if they are not complied with. As part of each proposal, a system of checks and penalties will need to be packaged with them. Most should be embedded in new smart contracts and attached to the payments for building/implementing/maintaining each rule/law.

Final Thoughts

It is a beginning. Not an end. A simple system that does not rely upon centralized people and engrained hierarchies to provide the things we are used to. It is Democracy – true people power.

Also published here.